The Better Way To Solve Problems In Business

Mark Suster

Jul. 14, 2010, 9:55 AM

<a href="http://www.flickr.com/photos/orphanjones/431843839/"> orphanjones </a> via Flickr For the first 5 years of my career I was a "bottom up" thinker and worker. I assembled tons of data, grouped things, found results and drew conclusions. It was difficult to make the transition to a "top down" thinker but as a senior executive - and as an entrepreneur - you're far less effective without this skill in your arsenal. You need to be able to structure problems / solutions at the appropriate level to communicate effective and drive decision-making.

The difference is in formulating hypothesis then testing conclusions / data vs. assembling data and finding patterns. I know it might sound a bit esoteric so let me explain:

I started my career as a programmer. We did big, boring but necessary implementations for large companies. I started by doing billing systems.

In billing we literally started thinking about all of the types of bills that would be generated for customers: full payment, partial payment, split payment, senior discount, student discount, level pay plan, etc. We then made groupings of the common features of each piece of logic so we could figure out what "shared services" we could build so that we could have reusable code. This is bottom-up planning. It is useful in many situations and was useful to me in this situation.

I next moved into system design where I designed computer systems to deal with large industrial natural gas customers and telecommunication companies. I had to understand their business requirements and document them all. I had to understand all of the normal business rules as well as all "edge cases." Again, I grouped them into related functions and then designed systems to handle the rules.

I spent the first 5 years of my career as a "bottom up thinker." It was appropriate for my job and stage of career.

Post MBA I went into strategy consulting where my job was to problem solve for clients. Often I had a very limited time. Clients wanted to see "preliminary findings" in 4-5 weeks and final results in 8-10. This is a problem for a strategy consultant because you are, by definition, a generalist that is thrown into new problems again and again. I struggled on my first few assignments. It took too long for me to get around to speak to every department, get data, assemble it, analyze the data to formulate conclusions and then communicate it to executive staff.

The wisest mentor I ever had was Ameet Shah, my partner on several projects. He taught me much that I know about critical thinking. He coached me that I had to start with the answers. WTF? How can I START with the answers? How can that be effective? "Well, we know the basic structure of the problem we're trying to solve and we have hypotheses about what some of the answers will be based on our experience. You need to put this all down into a structured diagram from the first week with the answers that tie to the logic of the problem we're trying to solve."

Heresy.

But he had more insight, "once we know the structure of the problem and our solution we can plan the data that proves or disproves our theories. The key is not to be wedded to our original answer. But by problem solving in a 'top down' manner we can be much more focused about what data we collect. We can also begin to socialize our answers with people in the company to get their reactions. That alone will help us solve the problems."

It was very difficult to get used to it because I didn't think I had it within me to do this kind of top-down structured thinking. I bought the most popular book on the topic, "The Mind of the Strategist" by Kenichi Ohmae, who is ex McKinsey. I found this book very useful but still a little bit hard to implement. I'm glad I read it though.

I later took a course with Barbara Minto (who taught McKinsey people) and bought her book "The Pyramid Principle." This was a breakthrough for me. It is about structuring your thoughts, presentations and communications. You group items into component parts in a top-down manner. The book is expensive but for me personally this helped me enormously. This and frankly a lot of practice.

But I approach problems in a different way now. I start with answers and structure what I think the organization of the problem is. I then try out my solutions by interviewing people to "prove or disprove" my conclusions. I'm never right the first time so I spend time adjusting my frameworks. And if data is required then I apply actual data to my conclusions. The process is bankrupt if you simply tweak the data to support your hypotheses.

But applied correctly and this is golden.

I often go into meetings with portfolio companies with a structure worked out of what I believe the critical issues are. I structure it top down so we don't get bogged down in the details that are irrelevant. To give you an example it might go something like this, here is a made up situation that a portfolio company might face:

- we currently sell through channels - we're the market leader in signing up our channel partners - but not enough volume of business is yet going through the channels - our three options are: spend more time helping the channel sell, spend more time with customers bringing them into our channel partners or sell direct - my guess is that we aren't prepared to sell direct because that would require a broader team and more capabilities than we have. So the real question is - do we spend more of our time and limited resources helping our channel or educating and marketing to their customers - on a less critical path we should evaluate the capabilities required to serve customers directly if we ever needed to and know what the channel's response would be - discuss

If I framed the issue incorrectly I haven't done my job. If it requires minor tweaks we change the discussion on the fly. But we have the roadmap for our discussion and don't have to wander on the back roads of unstructured conversations. I needed no data for this discussion. It is at the appropriate level. It drives the conversation to what matters.

I know it sounds exceedingly easy. It's not. And few people in my experience do this well so many board meetings wander.

I challenge you to consider whether you're top-down or bottom up. In analysis there are always circumstances for each approach. But in leadership and entrepreneurism the top-down approach will be the right solution more often than not.